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Blockbuster Counterclaim Disputes Netflix Patents

June 14, 2006|From Reuters

Internet video rental company Netflix Corp.'s legal claims against rival Blockbuster Inc. are based on unenforceable patents, Blockbuster said in a counterclaim filed Tuesday.

In a bid to shut down Blockbuster's online service, Netflix had sued Blockbuster, the leading movie and game rental company. But Dallas-based Blockbuster said Tuesday that the lawsuit was based on patents Netflix obtained deceptively, in a bid to monopolize online rentals.

In an April lawsuit, Netflix accused Blockbuster of starting its online service in 2004 despite knowing that the service infringed a Netflix patent.

"There is nothing original about renting movies or subscription rental programs," Blockbuster lawyer Marshall Grossman said, noting both were widely practiced long before any such invention by Netflix.

He likened Netflix to "a fast-food restaurant trying to patent selling hamburgers through a drive-through window."

The claims filed by Blockbuster against Netflix also allege that Netflix failed to inform the Patent Office of previous patents and previous business methods of other companies. Blockbuster said Netflix has admitted that it was aware of the prior patents of another company, which had already put Netflix on notice about possible patent infringement.

Responding to Blockbuster's charges, Netflix spokesman Steve Swasey said the company would vigorously defend its patents.

"It is up to the courts to decide," he said.

Shares of Blockbuster slipped 21 cents to $4.48. Netflix shares rose 46 cents to $27.54.

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